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599- Final Note Collaboration

599- Final Note Collaboration - 1/24 CORE COMPETENCIES(Jan...

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1/24 CORE COMPETENCIES (Jan 24) “What does the Bidder bring to the table?” Assets – people, technology, locations, products Competencies – knowledge, skills, processes Capabilities – ability to transform, improve or change firm performance and competencies over time Criteria Valuable – provide real benefits to customers/stakeholders Inimitable – be hard for competitors to imitate Rare – better than comps Organizationally relevant – apply, across firms business units Available – resources must not be utilized to capacity Durable – ability to be sustained or built on over long periods Cisco Case (in acquiring Summa Four, Inc.) Summa Four, Inc. (Manchester)– developed and manufactured programmable switches used in the development of telephone applications. Installs switches: 50% outside of U.S. Next generation product > 1 year away (Project Alpha) Small company – will employees want to lose their influence? MRP system not compatible with Cisco’s MFG: efficient and orderly 250 suppliers: 85 new to Cisco, makes this complex integration Concern: 200 of SF’s parts were sole-sourced pricing 1998 – Agreement to acquire Summa Four for $116M in stock Need integrate the two companies manufacturing organizations Cisco Core Competencies given in Slide 4 of Jan. 24 Cisco Overview Multi-protocol router technology that links different networks Provided functionality for the WWW Core products: routers, switches Have an expanded product line: web mgt. tools, dial up, internet appliances, network mgt. software, new data and telephone networks (Sprint) Went public in 1990 o Revenues grew at compounded annual rate of 89% fastest EVER Cisco Business Strategy 1. Assemble broad product line to provide one-stop shopping for networking solution 2. Organize the acquisition process 3. Define industry-wide software standards for equipment (quality) 4. Pick the right strategic partners Used acquisitions and partnerships to gain access to new technologies
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o Many high-tech co. saw this as a sign of weakness (need for “outside help”) o Lead to faster development of products Cisco’s MFG Philosophy/Organization Mostly centralized, only engineering/marketing decentralized 3 separate lines of business 3 MFG facilities heavily dependent on outsourcing 25% revenue, 50% unit volume MFG and shipped out of external factories Cisco Acquisition Strategy 3 Goals : Employee Retention, Follow-up on New Product Development, ROI Retention Focused on ensuring that employees maintained comparable/better benefits/financial considerations HR develops transition plan, 6-7 weeks executing plan after acquisition closed (Roll-out process: start plan with new mgt.) Significant issue: All employees must waive rights to accelerated vesting on their existing stock options before deal closed They would receive equivalent value of Cisco options and offered a retention bonus after years 1 & 2
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